Employers often hire workers and categorize them as independent contractors to avoid paying overtime, taxes, and compliance with other federal and state labor and employment related laws. In overtime cases the courts and the administrative agencies do not automatically accept the idea that a worker is not entitled to overtime rights by simply categorizing the worker as an independent contractor. The workers are more often than not still employees and can file overtime claims.
The test to determine if a worker is an independent contractor is based primarily on the principal’s right to direct and control the manner and means by which the work is performed. It does not mean the employer has to exercise these rights. If the principal has the right to control then the worker will be an employee, even if the employer never actually exercises the control. When the principal does not have the right of direction and control over the worker, then the worker is independent contractor. The question in most cases is what the right to control mean.
- Do you instruct or supervise the worker while the worker is working?
Independent contractors are free to jobs in any way they see fit. It is the end result that matters for independent contractors. If there are company procedures or if the worker is given specific instructions on how to do the work, then chances are that the worker is an employee.
Can you fire the worker at any time or can the worker quit at any time without notice?
If you have the right to fire the worker without notice, it strongly shows that you have the right to control the worker. Independent contractors are hired for specific jobs and can not be fired until the job is complete. Independent contractors are not free to quit with little or no notice.
Is the work performed part of your regular business?
Work which is a necessary part of the regular trade or business is normally done by employees and not something that would be contracted. Something that is done often would have considered work done by independent contractor. Regularly answering the phone to take orders would not be done by an independent contractor.
Does the worker have a separately established business?
Independent contractors hold themselves out to the general public as available to perform services similar to those performed for the principal, this is evidence that the individuals are operating separately established businesses and would normally be
independent contractor. Independent contractors are also free to hire employees and assign the work to others in any way that they choose and fire their employees fire their employees without your knowledge consent. Independent contractors normally advertise their services and seek new customers through the use of business cards.
Is the worker free to make business decisions which affect the worker’s ability to profit from the work?
An individual is…